1 2025:CGHC:17743 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR ACQA No. 104 of 2025 1 - Manisha Sharma W/o Ashok Sharma, Aged About 46 Years R/o Sanichari Bazar, PS and District Durg Chhattisgarh (Wrongly Mentioned In The Acquittal Order Dated 11-12-2024 as Manish Sharma Correct Is Manisha Sharma) ... Petitioner(s) versus 1 - Umesh Kumar Dewangan S/o Laxman Dewangan, Aged About 40 Years, R/o Ganesh Market Gurudwara Road, Supela Bhilai, Distt. Durg Chhattisgarh ... Respondent(s) For Appellant : Mr. Rishi Sahu, Advocate For Respondent : Mr. Shivam Agrawal and Mr. Hemant Kumar Agrawal, Advocates SB : Hon'ble Shri Justice Deepak Kumar Tiwari Judgment on Board 17/04/2025 1. This Acquittal Appeal has been preferred against the judgment dated 11.12.2024 passed by the Judicial Magistrate First Class, Durg, SHYNA AJAY Digitally signed by SHYNA AJAY Date: 2025.04.21 17:12:33 +0530 2 whereby, the respondent/accused in Complaint Case No.4819/2015 has been acquitted under Section 138 of the Negotiable Instruments Act, 1881 (in short “the NI Act”). 2. As per the complaint, the husband of the complainant and the respondent/accused were having business relationship. The husband of the complainant has been running a business of electronic goods in the name of ‘Jagdambe Electricals’. In the month of August 2014, the respondent/accused borrowed money from the complainant and her husband to the tune of Rs.6 lakhs as he suffered some business loss. The complainant and her husband on account of their past business terms advanced the aforesaid loan on 12.9.2014 and in turn, the respondent/accused promised to return the same in two installments within 8 months and also executed a promissory note in this regard. For repayment of the aforesaid loan, the accused issue a cheque of Rs.4 lakhs on 2.2.2015 (Ex.P/2C) and the same was presented for encashment vide Ex.P/3C. However, it got dishonoured due to insufficiency of funds vide the return memo (Ex.P/4C) sent by the ICICI Bank Ltd. Thereafter, a legal notice (Ex.P/5C) was sent through a registered post but after the said notice, when the cheque amount was not paid, the complaint case was filed. 3. In order to prove his case, the complainant examined herself and exhibited 9 documents. The respondent/accused in his statement stated that he has been falsely implicated and as a surety, he had given 6 blank cheques to the husband of the complainant, which has been misused. However, he did not adduce any defence evidence. After evaluation of the evidence, the trial Court acquitted the respondent/accused by the impugned judgment. Hence, this Appeal. 3 4. Learned counsel for the appellant would submit that the trial Court has not appreciated the evidence in proper perspective though there is a legal presumption under Sections 118 and 139 of the NI Act and the said presumption has not been rebutted by the respondent/accused. 5. On the other hand, learned counsel for the respondent would support the impugned judgment. 6. Heard learned counsel for the parties and also perused the documents annexed with the appeal. 7. In the matter of Rajesh Jain Vs. Ajay Singh, reported in (2023) 10 SCC 148, the law relating to the effect of legal presumption as per Section 118 and Section 139 of the NI Act has been clarified. As per Section 118 of the NI Act it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration and as per Section 139 of the Act “unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability. Both the presumptions are rebuttable in nature. The relevant paras of the aforesaid judgment i.e. 33 to 44 is reproduced hereunder:- “33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that “unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability”. It will be seen that the “presumed fact” directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138. The rules discussed hereinbelow are common to both the presumptions under Section 139 and Section 118 and are hence, not repeated- reference to one can be taken as reference to another” 4 “34. Section 139 of the NI Act, which takes the form of a “shall presume” clause is illustrative of a presumption of law. Because Section 139 requires that the Court “shall presume” the fact stated therein, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase “unless the contrary is proved”.” “35.The Court will necessarily presume that the cheque had been issued towards discharge of a legally enforceable debt/liability in two circumstances. Firstly, when the drawer of the cheque admits issuance/execution of the cheque and secondly, in the event where the complainant proves that cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring about the activation of the presumptive clause. [Bharat Barrel & Drum Mfg. v. Amin Chand Payrelal] [(1999) 3 SCC 35]” “36.Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar (2019) 4 SCC 197]. Therefore, mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.” “37. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.” 5 “38.John Henry Wigmore and the Rules of Evidence: The Hidden Origins of Modern Law on Evidence states as follows: “The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption ‘disappears as a rule of law and the case is in the Jury's hands free from any rule.” “39.The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non- existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of “preponderance of probabilities”, similar to a defendant in a civil proceeding. [Rangappa vs. Sri Mohan (AIR 2010 SC 1898)]” “40.In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words “until the contrary is proved” occurring in Section 139 do not mean that accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa v. Mudibasappa (AIR 2019 SC 1983); see also Kumar Exports v. Sharma Carpets (2009) 2 SCC 513]” “41.In other words, the accused is left with two options. The first option-of proving that the debt/liability does not exist-is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non-existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused’s case may be even fifty-one to forty-nine and arising out of the 6 entire circumstances of the case, which includes: the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his 313 CrPC statement or at the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was “no debt/liability”. [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513]” “42.The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact.” “43.The accused may adduce direct evidence to prove that the instrument was not issued in discharge of a debt/liability and, if he adduces acceptable evidence, the burden again shifts to the complainant. At the same time, the accused may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling, the burden may likewise shift to the complainant. It is open for him to also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. The burden of proof may shift by presumptions of law or fact. In Kundan Lal case v. Custodian (Evacuee Property), AIR 1961 SC 1316 when the creditor had failed to produce his account books, this Court raised a presumption of fact under Section 114, that the evidence, if produced would have shown the non-existence of consideration. Though, in that case, this Court was dealing with the presumptive clause in Section 118 NI Act, since the nature of the presumptive clauses in Sections 118 and 139 is the same, the analogy can be extended and applied in the context of Section 139 as well.” “44.Therefore, in fine, it can be said that once the accused adduces evidence to the satisfaction of the Court that on a preponderance of probabilities there exists no debt/liability in the manner pleaded in the complaint or the demand notice or the affidavit-evidence, the burden shifts to the complainant and the presumption “disappears” and does not haunt the accused any longer. The onus having now shifted to the complainant, he will be 7 obliged to prove the existence of a debt/liability as a matter of fact and his failure to prove would result in dismissal of his complaint case. Thereafter, the presumption under Section 139 does not again come to the complainant's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance. [Basalingappa v. Mudibasappa, AIR 2019 SC 1983; see also, Rangappa v. Sri Mohan (2010) 11 SCC 441]” 8. Reverting back to the facts of the present case, though the complainant has stated that she collected the money after selling her land and by imparting tuition, which has been extended as loan to the respondent/accused but the complainant has not filed any document to show that the money was collected through such source of fund. Further, no Bank statement has also been filed. Moreover, though the complainant has lent a huge amount of Rs.6 lakhs without charging any interest, but did not file any IT returns showing the aforesaid transactions. 9. In Krishna Janardhan Bhat Vs Dattatraya G. Hegde, reported in (2008) 4 SCC 54, it has been observed that when the loan advanced in cash is of more than Rs.20,000/-, such type of transaction is barred under Section 269 SS of the Income Tax Act. In terms of of the said Section, any advance taken by way of any loan of more than Rs. 20,000/- is to be made by way of an account payee cheque only and the violation of the aforesaid provision is punishable under Section 271-D of the Act and the said provision reads as under: 271D. Penalty for failure to comply with the provisions of section 269SS. (1) If a person takes or accepts any loan or deposit in contravention of the provisions of 8 section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 10. In view of the aforesaid discussion, this Court is of the opinion that the accused/respondent has successfully raised a reasonable doubt about the transaction for which the cheque was presented. If a transaction appears to be dubious, the presumption under Sections 118 and 139 of the NI Act can be rebutted. This principle was reiterated in the matter of Dattatraya Vs. Sharanappa reported in 2024 (8) SCC 573, where, the Supreme Court upheld the acquittal of the accused. 11.In view of the above, this Court is of the view that there is no perversity or illegality in the finding recorded by the trial Court and the said finding is based on evidence available on record and further, the view taken by it is a possible one, which does not require any interference. 12. Resultantly, the Appeal is dismissed. Sd/- (Deepak Kumar Tiwari) Judge Shyna